Poxviruses, unlike other DNA viruses, replicate in the cytoplasm of the cell and encode many of the enzymes and factors needed for transcription of their genomes. Vaccinia virus, therefore, provides a unique system for combining biochemical and genetic approaches for investigating mechanisms of gene regulation and mRNA biosynthesis. Studies with vaccinia virus indicated that the genes are divided into three temporal classes-early, intermediate, and late-that are regulated in a cascade fashion. This past year, important new discoveries that relate to each stage of transcription were made. The virus-encoded RNA polymerase-associated protein RAP94 was shown to confer promoter specificity for initiating transcription of vaccinia virus early stage genes. In addition, RAP94 was found to target the multicomponent transcription apparatus into assembling virus particles. Two factors for transcription of intermedicate stage genes, VITF-1 and VITF-2, were isolated. VITF-1 was purified to homogeneity and identified as a viral homolog of eukaryotic transcription factor SII. VITF-2 was found to be a cellular protein that is located in the nucleus of uninfected cells. VITF-2 is the first cellular protein shown to have a direct role in vaccinia virus transcription. An additional factor, named P3, was found to be required for transcription of late genes. P3, unlike the other late transcription factors, is either an early viral protein or is induced by an early viral protein. A previously unrecognized signal, uridylate residues within the 3/ terminal end of the viral mRNA, was shown to be crucial for poly(A) polymerase to initiate poly(A) tail formation.